Fill in the blanks: Output, FC, VC, TC, MC, AFC, AVC, ATC, Price, TR, AR, MR Oup
ID: 1202978 • Letter: F
Question
Fill in the blanks: Output, FC, VC, TC, MC, AFC, AVC, ATC, Price, TR, AR, MR
Ouput 0,1,2,3,4,5
FC 55
VC 0,35,55,75,105,155
Price 50
Why does MC fall and then rise as output increases?
What is the relationship between price and margianl revenue under perfect competition?
How is the price determined under perfect competition?
Does an individual firm determine price under perfect condition?
What is the profit maximization rule for a perfect competitor, and which variable is the perfect competitor able to determine (q and/or p)?
Why will a firm maximize its profits or minimize its losses at the output where MR equals MC? Explain.
Why a perfect competitor is called a price taker?
What is the difference between shutting down and exiting the market? Explain
Explanation / Answer
As output increases, frims start experiencing economies of scale which decreases cost of production and hence MC. Under perfect competition Price and MR are exactly same because price is constant Price is determined in the industry by market demand and supply where Marginal cost is equal to Marginal Revnue. No. Firm is just a price taker.
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